Ashlee Adams and Alana Miller graduated m accounting with their Masters In May o

Question

Ashlee Adams and Alana Miller graduated m accounting with their Masters In May of Year 17. During the rest of Year 17. they completed the CPA exam. Ashlee and Alana worked for a large manufacturing company during Year 18 and 19 By November. Year 19. Ashlee and Alana decided to take their savings and start their own CPA practice In December. Year 19. they worked with an attorney and established A & M CPA, U C Also, they rented office space By January, they were read/to start business Dunng January Year 20, A & M CPA. ILC had the following transactions: Record the above transactions m journal form Post the transactions to ledger accounts Prepare an unadjusted trial balance. A t the end of January, Ashlee and Alana prepared the following information. Supplies on hand. $100 b. O n e month rent has been used.. The equipment purchased on January 2 had a 5-year life and no salvage value Ashlee and Alana decided to use the straight method of depreciation. O ne month Insurance has eipired. One month interest on the note was accrued Record the adjusting entries in journal form and post to ledger accounts Prepare an adjusted trial balance Prepare financial statements - income statement, statement of retained earnings, and balance sheet Prepare closing entries in journal form and post to ledeer accounts Prepare a post-closing trial balance

Explanation / Answer

1. Journal entries:

3. Unadjusted Trial Balance as of January 31:

4. Adjusting entries:

5. Adjusted Trial Balance as of January 31:

6. Income Statement for the month ended January 31:

Statement of retained earnings for the month of January:

Balance Sheet as of January 31:

7. Closing entries:

8. Post closing trial balance:

Date Account Title Debit Credit January $ $ 2 Cash 14,000 Common stock 14,000 2 Prepaid rent 3,000 Cash 3,000 2 Legal expenses 2,000 Cash 2,000 2 Prepaid insurance 3,600 Cash 3,600 2 Supplies 500 Cash 500 2 Office equipment 8,000 Cash 2,000 Note payable 6,000 6 Cash 1,000 Service revenue 1,000 6 Advertising expense 400 Cash 400 10 Cash 2,000 Service revenue 2,000 17 Cash 3,000 Accounts receivable 1,000 Service revenue 4,000 22 Cash 500 Accounts receivable 500 24 Cash 4,000 Accounts receivable 1,200 Service revenue 5,200 28 Cash 800 Accounts receivable 800 31 Telephone expense 250 Cash 250 31 Utilities 200 Cash 200 31 Utilities expense 75 Cash 75 31 Cash 4,500 Accounts receivable 1,500 Service revenue 6,000 31 Dividends 2,000 Cash 2,000

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